IHH-Fortis deal in doubt after Supreme Court order

Following the Fortis deal, IHH Healthcare was supposed to make an open offer to acquire another 26% stake in the hospital chain. But that move was stalled by court

Chaya UnnikrishnanUpdated: Monday, September 26, 2022, 09:49 AM IST
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The Supreme Court's final judgment on Friday on the suo moto contempt petition questioning Ranbaxy ex-promoters Malvinder Singh and Shivinder Singh’s decision to sell their holding in Fortis Healthcare to Malaysian healthcare giant IHH Healthcare Berhad, has put the deal signed in 2018 in doubt.

On Friday, the Supreme Court, while disposing of the contempt petition and sentencing the brothers to six months in jail, directed the Delhi High Court to consider a forensic audit of the deal.

The verdict, which led to a record fall in the Fortis share price on Friday, has put a question mark on the 2018 deal between the brothers and IHH. Two sources close to the development said the deal could even get reversed.

Japanese drugmaker Daiichi Sankyo had challenged the Fortis-IHH deal as it had the first right of refusal to acquire shares of Fortis held by the brothers by virtue of the compensation awarded by a Singapore court.

Daiichi had won its case against the promoters of the erstwhile Ranbaxy Laboratories Ltd for not disclosing important information regarding its US regulatory issues and other 'frauds' while selling the controlling stake in the then Delhi-based drug company. Daiichi had acquired controlling stake in Ranbaxy in 2008.

Following the Fortis deal, IHH Healthcare was supposed to make an open offer to acquire another 26% stake in the hospital chain. But that move was stalled by court.

IHH, in fact, had announced its decision to strategically grow the Indian hospital chain and unlock value in its subsidiary SRL Diagnostics, India's largest diagnostics company by number of labs and operational network.

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